{"id":1004603038,"date":"2022-09-16T02:51:40","date_gmt":"2022-09-16T10:51:40","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004603038"},"modified":"2022-12-08T21:00:12","modified_gmt":"2022-12-09T05:00:12","slug":"what-gic-oak-streets-14b-acquisition-means-for-net-lease","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/what-gic-oak-streets-14b-acquisition-means-for-net-lease\/","title":{"rendered":"What the $14B GIC-Oak Street Buy Means for Net Lease"},"content":{"rendered":"
\"Spenser<\/a>

Spenser Allaway, Senior Analyst, Net Lease, Gaming & Self-Storage, Green Street. Image courtesy of Green Street<\/p><\/div>\n

The announcement Thursday that Singapore sovereign wealth fund GIC<\/strong> and Oak Street<\/strong>, a division of Blue Owl,<\/a> were acquiring STORE Capital<\/strong> in an all-cash deal valued at $14 billion and taking it private surprised analysts and industry experts who said it could lead to more M&A and takeout deals in the net lease industry.<\/p>\n

Under the terms of the definitive merger agreement, STORE shareholders will receive $32.25 per share in cash, a roughly 20 percent premium to the company\u2019s closing price on Sept. 14.<\/p>\n

The agreement includes a 30-day period expiring Oct. 15 in which STORE can seek other offers. The transaction, which was unanimously approved by the STORE Capital Board of Directors, needs approval of STORE Capital\u2019s stockholders.<\/p>\n

If approved, the deal is expected to close in the first quarter of 2023. Once the deal closes, STORE Capital will be taken private by new owners and no longer trade on the New York Stock Exchange.<\/p>\n

\"Haendel<\/a>

Haendel St. Juste, Managing Director & Senior Equity Research Analyst, Mizuho Securities USA. Image courtesy of Mizuho Securities USA<\/p><\/div>\n

With investments in more than 3,000 properties across the U.S. and a portfolio valued at approximately $11.4 billion, Scottsdale, Ariz.,-based STORE Capital is one of the largest and fastest-growing net-lease REITs. Its portfolio includes properties used by restaurants, health clubs, medical office, manufacturing facilities and auto dealerships.<\/p>\n

\u201cThe STORE Capital privatization is a surprise given the rising rate environment and worsening economic backdrop,\u201d Spenser Allaway, a Green Street<\/strong> senior analyst and sector head of net lease, gaming & self-storage, told Commercial Property Executive<\/em>. \u201cSTORE\u2019s management team and board deserve kudos for striking a great deal for shareholders, which was struck at a roughly 20 percent premium to unaffected share price and an approximate 30 percent premium to Green Street\u2019s NAV\/share estimate.\u201d<\/p>\n

In a note to investors, Haendel St. Juste, a managing director and analyst with Mizuho Securities USA<\/strong>, said the news was surprising to analysts, investors and other managements. He said he was surprised by both the timing given rising interest rates and recession concerns and the size of the planned transaction because of recent commentary about transactions being put on hold due to tighter and more costly debt. St. Juste was among those who said this deal, expected to close in the first quarter of 2023, could spur other transactions.<\/p>\n

\n

READ ALSO<\/strong>: While Net Lease Volume Slips, Demand Remains Strong<\/a><\/p>\n

\n

\u201cWe believe this rekindles M&A\/takeout spirits, provides support for STORE\u2019s peers (Essential Properties Realty Trust, Spirit Realty Capital etc.) and could lead to more net lease privatizations as many companies trade near NAV and investors search for yield,\u201d St. Juste wrote in his report shared with CPE.<\/em><\/p>\n

\"\"<\/a>

Randy Blankstein, President, The Boulder Group<\/p><\/div>\n

Randy Blankstein, president of The Boulder Group<\/strong>, a net lease advisory firm, told CPE<\/em> he also expects more activity in the wake of this deal.<\/p>\n

\u201cThe amount of equity focusing on the net lease sector today far outpaces the amount of quality offerings available and it makes sense that institutional investors would target REITs. The net lease market remains supply constrained in the near term and thus the expectation is that there will likely be more REIT transactions in the coming months,\u201d Blankstein said.<\/p>\n

Noting that the deal \u201csets an interesting blueprint,\u201d St. Juste said in his investors\u2019 report to watch for more privatizations in the space despite the current debt challenges. He stated rising and attractive yields in the subsector could tempt other private buyers, including sovereign wealth and pension funds, to increase their exposure to net lease.<\/p>\n

Complementary portfolio<\/strong><\/h2>\n

Tawn Kelly, chairman of STORE Capital\u2019s board of directors, said in prepared remarks the all-cash transaction delivers a meaningful premium that provides immediate and certain value to the REIT\u2019s shareholders in a challenging market environment while simultaneously positioning the company, its customers and partners for continued success.<\/p>\n

STORE Capital CEO & President Mary Fedewa said in prepared remarks the planned deal is also an endorsement by two leading real estate investors with significant access to capital of the strength of the platform, its experienced leadership and disciplined investment approach.<\/p>\n

\n

READ ALSO<\/strong>: Net Lease Cap Rates Are Climbing. Now What?<\/a><\/p>\n

\n

Lee Kok Sun, chief investment officer of real estate at GIC, pointed to STORE Capital\u2019s impressive cash flow profile, long-weighted average lease term and highly diversified portfolio with strong rent coverage in his prepared comments on the planned merger.<\/p>\n

Marc Zahr, president of Oak Street, stated in prepared remarks they believe the STORE Capital platform complements Oak Street\u2019s exposure to the triple-net industry and focus on sale-leasebacks. Zahr said the potential scale of this combination and partnership can deliver one of the most diversified, unique and long dated net lease platforms across the globe.<\/p>\n

Several analysts contacted by CPE<\/em> also commented on the STORE\u2019s portfolio and what it could add to both GIC and Oak Street\u2019s holdings.<\/p>\n

\u201cThe company\u2019s unique business model does seem like a good fit with the buyer,\u201d Allaway told CPE.<\/em><\/p>\n

St. Juste stated in his report the acquisition would give GIC and Oak Street exposure to a diverse net lease portfolio with attractive yields and steady cash flow. He also noted the deal would give GIC, a leading global investment firm, entry into the single tenant net lease space and give both firms an established net lease investment platform<\/a> and infrastructure.<\/p>\n

Advisory teams<\/strong><\/h2>\n

Evercore<\/strong> and Goldman Sachs & Co<\/strong>. LLC are acting as financial advisors to STORE Capital and DLA Piper <\/strong>LLP (US) is acting as its legal counsel.<\/p>\n

Eastdil Secured Advisors<\/strong> LLC and Citigroup Global Markets<\/strong> Inc. are acting as financial advisors to GIC and Oak Street. Skadden, Arps, Slate, Meagher & Flom<\/strong> LLP is acting as legal counsel to GIC and Kirkland & Ellis<\/strong> LLP is acting as legal counsel to Oak Street.<\/p>\n","protected":false},"excerpt":{"rendered":"

While surprised by the plan, analysts now expect more such moves in the coming months.<\/p>\n","protected":false},"author":1068,"featured_media":1004547676,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21781,21808,21783,21742],"tags":[33650,39052,37350,33428,34160,32940],"class_list":["post-1004603038","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-corporate-real-estate","category-featured","category-investment","category-latest","tag-gic","tag-green-street-advisors","tag-oak-street-real-estate-capital","tag-randy-blankstein","tag-store-capital","tag-the-boulder-group"],"acf":[],"yoast_head":"\nWhat the $14B GIC-Oak Street Buy Means for Net Lease - Commercial Property Executive<\/title>\n<meta name=\"description\" content=\"Singapore sovereign wealth fund GIC and Oak Street, a division of Blue Owl, acquire STORE Capital in an all-cash deal valued at $14 billion.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/what-gic-oak-streets-14b-acquisition-means-for-net-lease\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What the $14B GIC-Oak Street Buy Means for Net Lease\" \/>\n<meta property=\"og:description\" content=\"Singapore sovereign wealth fund GIC and Oak Street, a division of Blue Owl, acquire STORE Capital in an all-cash deal valued at $14 billion.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/what-gic-oak-streets-14b-acquisition-means-for-net-lease\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2022-09-16T10:51:40+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-12-09T05:00:12+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2021\/08\/hands-3127297_1920.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"801\" \/>\n\t<meta property=\"og:image:height\" content=\"620\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Gail Kalinoski\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/what-gic-oak-streets-14b-acquisition-means-for-net-lease\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/what-gic-oak-streets-14b-acquisition-means-for-net-lease\/\",\"name\":\"What the $14B GIC-Oak Street Buy Means for Net Lease - 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